Dear Readers,

Welcome to the latest issue of our Insider special edition series, whose focus is on BusinessMembership Organisations' sustainability amidst COVID-19. Many businesses that rely on“foot traffic” and in-person transactions are struggling to stay afloat due to the economicupheaval caused by the pandemic. In this issue, we'll explore the best in practice measuresthat BMOs can implement to mitigate the economic impact of COVID-19 whilst continuing tooffer the much needed support and value added services to their membership.

Sandra Uwera, CEO, COMESA Business Council

www.comesabusinesscouncil.org

INTRODUCTION

BMOs are organizations with business members, whose main objective is to provide services to the respectivebusinesses and/or represent their interests through lobbying and other means. BMOs can be organised geographically(chambers of commerce being the prime example) or sectorally. The business membership criteria may be satisfied bothvia direct membership (i.e. when the business entity is directly a member of the BMO) and indirect membership via theexecutive or other representative of the business entity, provided the such representative is de facto enrolled in the BMOon behalf of the business. Members are required to pay regular dues, which typically provide BMOs with the majority oftheir fund.

Business Membership Organizations (BMOs) play an crucial role in enhancing public-private dialogue, promotingentrepreneurs’ business interests and supporting development of business environment overall. BCP’s enable BMOs topromptly and efficiently respond to crisis situations, thereby mitigating their impact and ensuring seamless offering ofmembership support services.

The COVID-19 pandemic has caused social and economic upheaval across theCOMESA region and beyond, with global and regional supply chainsexperiencing severe disruptions, that are hampering the ability of manysuppliers to move materials and products to vendors, even where demand hasremained strong. This disruptive business environment informs the need forBusiness Member Organisations (BMOs) to put in place robust BusinessContinuity Plans (BCPs), which anticipate a broad range of crisis situations, andtake into consideration the newer models of remote operations managementsand virtual office spaces for uninterrupted provision of trade facilitation andinvestment opportunities.

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"In the past, business-continuity planstended to focus on technology resiliency,but in our new world, plans will need toprioritize operational resiliency-such as

flexible working models, geographicredundancy at the city rather than country

level, and virtualization of key processes,security protocols, and policies."

~McKinsey & Company

BUSINESS INSIGHTS OF COVID-19Business Insider - Special Edition No. 5

The laws, policies, and regulations that shape a country’s business environment can be seen as the outcome of anegotiation (or contestation) between the public and private sector. Where the private sector lacks effective voice, theprevailing laws, policies, and regulations tend to be ill-conceived and act as a brake on enterprise and wealth creation.BMOs act as key intermediaries between the public and private sector. When they work effectively, BMOs identifypressing constraints in the business environment, formulate evidence-based policy proposals, advocate for business-friendly laws and regulation, and engage government in substantive and constructive dialogue.

Effective BMOs monitor the implementation of existing policies and regulations and hold government officials to account.Because they represent the interests of numerous members, they overcome some of the collective action andcoordination problems that prevent individual businesses from advocating effectively on their own. They also providestrength in numbers - BMOs can speak out against harmful government policies when individual businesses may beafraid to do so (for fear of retribution or lost government contracts).

RATIONALE FOR BUSINESS MEMBERORGANISATIONS (BMOs)

EFFECTS OF COVID-19 ON ECONOMIES

IMPACT OF COVID-19 ON BMOs

Business Insights of COVID-19

The coronavirus (COVID-19) pandemic has created majordisruptions in the global economy and the life of businesses. Thesedisruptions are creating a wide range of impacts on companies andmany of them are struggling financially. The pandemic has alsoexposed major vulnerabilities in company operations and supplychains linked to conditions of work and disaster preparedness.

There are several ways the coronavirus pandemic is affecting theeconomies, especially MSMEs, on both the supply and demandsides. On the supply side, companies experience a reduction in thesupply of labour due to containment measures through lockdownsand quarantines. Furthermore, supply chains are interrupted leadingto shortages of parts and intermediate goods.

Business Member Organisations, like businesses and governments, are experiencing new challenges and opportunitiesin the age of COVID-19. The following are some of the challenges emanating from the pandemic:

a) Limited ability to deliver services to membersBMOs are registering significantly higher interest in their work as a result of the outbreak - creating a divide where lowerlevels of expected revenues are being met with greater demand for existing and new services.

On the demand side, a dramatic and sudden loss of demand and revenue for businesses severely affects their ability tofunction, and causes severe liquidity shortages. Furthermore, consumers experience loss of income, fear of contagionand heightened uncertainty, which in turn reduces spending and consumption. These effects are compounded becauseworkers are laid off and firms are not able to pay salaries. Some sectors, such as tourism and transportation, areparticularly affected, also contributing to reduced business and consumer confidence.

The effect on SMEs is especially severe, particularly because of higher levels of vulnerability and lower resilience relatedto their size.

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Limited ICT hardware, software and tools for digital service delivery; limited adaptation for remote/ digital deployment; struggling to define effective solutions to challenges experienced by members.

Existing services that are most in demand include advocating for business as new COVID-19 relief programmes arebeing designed. However, most national chambers of commerce used to rely on face to face and other physical channels,which is impossible during COVID-19 measures. This has affected service delivery of the chambers as they havedeficiencies in the following areas:

b) Reduced revenueAccording to CIPE, prior to COVID-19 the largest revenue stream for BMOs in 2019 was membership dues by a largemargin, followed by sponsorships, trade shows/expos, events, and grants. Many of the revenue sources of BMOs arelargely dependent on the ability to gather in person. The inability to currently do so in many countries due to socialdistancing guidelines is a serious limitation that is actively affecting association revenues. More so, BMOs’ membercompanies are facing financial challenges, and unable to pay their membership dues.

EFFECTS OF COVID-19 ON ECONOMIES

KEY STRATEGIES BMOs CAN USE TO SUPPORTBUSINESS RECOVERY

EFFECTS OF COVID-19 ON ECONOMIES

Business Insights of COVID-19

Updates on movement of goods and services in the region and beyond, updating on major changes at borderprocesses and procedures.Providing market intelligence which will highlight business opportunities and how to access them, through variousplatforms which can easily accessible by members.Continuously offering capacity building programmes online which enhance their ability.

The International Trade Centre (ITC) in their presentation during the COMESA Business Council Industrial TechnicalMeeting held on 5th of August 2020 recommeded the following for BMOs, in the mapping of their recovery strategies:

a) Being a source of trusted information and adviceOne of the most effective means of addressing this crisis is through provision of timely, accurate trade and trade relatedinformation. An informed public is better positioned to make sound decisions including on questions related to trade. Thetrade information can take into account:

Bring businesses together;match opportunities, common offers and needs;broker cooperation between stakeholders.

b) Coordinating action to deliver economies of scale and scope Businesses working together can reduce costs through shared procurement, create economies of scale, and access newopportunities by sharing knowledge and resources. This is important to ensure rapid response during the health crisis andthe following economic recovery phase. Such collaboration benefits from a business support organization which can bringbusinesses together, match the opportunities with a shared offer or common need, and test willingness to cooperate inways that are neutral, fair and respect commercial sensitivities.BMOs can:

Strong support for the service by BMO leaders and the SecretaryGeneral.The information service answers the needs of the target group.Information service is effectively promoted and published.Strong linkages with other information services in the country have beenbuilt up.Pro-active and professional staff is committed to the service.Strong income orientation to make the service at least self-financing.

Critical success factors for introducing a sustainable information service canbe summarized as follows:

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Knowledge of business challenges;public-private dialogues convening power for advocacy purposes;ability to represent businesses of all sizes;ability to communicate government solutions;potential to deploy the solutions.

c) Bridge-building between public and private sectorTrade remains a major source of growth for developing and Least Developed Countries (LDCs). In the context of a globaleconomic response to the pandemic, trade facilitation (i.e. expediting the clearance of goods to reduce time and cost ofimport, export and transit procedures) and logistics are the cornerstone of any strategy aiming at developing supplychain resilience and keeping regional value chains running.

In this context, BMOs can play a key role in the path to recovery by keeping trade facilitation stakeholders informed,undertaking swift coordination of trade facilitation reforms and supporting implementation of COVID-19 response andrecovery plans. BMOs can do this by setting platforms for public-private engagements to discuss how best to addresschallenges in the operating environment.

BMOs are ideally suited to address these challenges due to their multi-stakeholder composition geared towardsadvancing trade facilitation policy reforms. BMOs can further assist their membership with their:

EFFECTS OF COVID-19 ON ECONOMIESInnovative start-upsRural areasClimate-friendly and socially responsible sectors

WomenYouthOther vulnerable underserved groups

e) Purposeful actions for a sustainability and inclusionWith a focus on rapid business recovery, this crisis could result in even greater inequality and more climate risk. Businessmember organizations have a crucial role in supporting business recovery, but also in connecting this to the imperative forsustainable and inclusive growth. This crisis creates an opportunity to shift some of their efforts away from existingbusinesses to innovative start-ups, from urban to rural areas, and from exploitative to climate-friendly and sociallyresponsible sectors, with a view to the greater good that lasts.

Chambers can reallocate efforts to:

Chambers can also design and deliver solutions for the special needs of:

Reduce business risk by conducting research tosupport decisions;reduce sunk costs through coordinated action whenentering new markets and value chains;

d) Path-finding and risk-taking for businessAs value chains are disrupted, small businesses must beagile and able to diversify their markets. Becausebusiness member organizations can act on behalf of manymicro, small and medium-sized enterprises, they are in agreat position to shoulder some of the risks when enteringnew markets or international value chains. They conductand share research, build in-market networks of partnersand experts, and break down tariff and non-tariff barriers.Chambers can:

Business Insights of COVID-19

advocate against tariff and non-tariff barriers to increase success rates.

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Boosts credibility and brokers trust between potential business partners;provides independent confirmation of a company’s legal status, size and capacity to deliver; leverages the authority of a government agency to access high-level influencers or to negotiate special conditions.

f) Credible intermediary and a trust-builderDisrupted supply chains may provide unknown players a chance to gain a foothold, but they may face reluctance frombuyers who prefer to establish trust first. Business members organizations can boost credibility by providing independentconfirmation of a company’s legal status, size and capacity to deliver. Furthermore, certain organizations leverage theauthority of a government agency to access high-level influencers or to negotiate special conditions.

BMOs' support of new players and new opportunities:

g) Acting within an ecosystem to deploy solutions for resilience and recoveryA good ecosystem of business member organisations has shared objectives and complementary strengths and includespublic and private sector organizations across various industries. At times of crisis these stakeholders can work togetherwillingly and create shared value by combining resources for agile responses. For example, a bank and businessmembers organization can promote an emergency bank loan with reduced collateral requirements for businesses whichhave a record of having engaged with a business member organization.

EFFECTS OF COVID-19 ON ECONOMIES

RECOMMENDATIONS FOR BMOs’ SUSTAINABILITY

Data collection to inform measures: Strengthen data collection mechanisms at national and regional levels, forexample through development of common/standardized templates across countries on the same issues, would be agreat value-added-service to members.Client management systems for BMOs: An up-to-date CRM system (quality data on members) is critical at this time(pandemic period). To incentivize the data collection process, it can help to convey to members that submission oftheir data would be useful in making a case for them to government on policy reform. Market information platforms: Need for regional and continental market information portals to provide information onmarkets and also provide regulatory issues and record some challenges that businesses are facing in regional trade. BMOs need to expand technical assistance support by establishing a centralized web-based information center toupdate members with relevant links, resources and templates to minimize the impact of Covid-19.

Development of consistent platforms for public-privatesector engagement and dialogue to address the ongoingchallenges presented by COVID-19.Principles of good business regulations: regulatory impactassessment, private sector consultation and grace periodsare still important and should be followed by governmentseven in the time of the COVID-19.BMOs and enterprises to develop a Phase II COVID-19Preparedness Plan in anticipation of a second lockdownbased on learnings from the first wave. This will ensurereadiness and preparedness in a way that allows them tocontinue operations sustainably.

Business Insights on COVID-19

COMESA Business CouncilCOMESA Building, Ben Bella Road | P.O. Box 30051, Lusaka, Zambia Email: info@comesabusinesscouncil.org Tel: +260 211 229725/32

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